Friday, May 25, 2012

Full Employment and Enforced Savings = No Economic Depression Without War

Great illustration from the 1930's and a pretty good article to go with it.

The insight that it was possible to have full employment and enforce savings without war seems to have occurred to some policy makers as part of the post war planning that went on in the higher reaches of government in the 1940's during World War II and even into the early 1950's as the Korean Conflict raged, but the lesson never really took.

Part of the problem was that Republicans in Congress and their owners and sponsors would not have it. Full employment at decent wages was a threat to the capitalist class, always had been, and so had always been avoided until the necessity of employing everyone who could work became unavoidable in 1941. The fact that so many had to be employed, and that all of the civilians had to be paid decently under decent working conditions (for the standards of the era; it was gross exploitation by modern standards) was only ensured by law.

A large segment of working class men was absorbed by the military during World War II, and there would continue to be a significant fraction of young working class men absorbed into the military so long as there was a draft. During the War, the draft service was required for the duration of hostilities plus (I believe it was) six months; afterwards, the draft took young men for two years. The principle was supposed to be Universal Service, as in WWII, but in practice, even during the War, most men remained civilians.

Full employment or nearly full employment after the war was maintained largely through government contracting with private industry. Government did not employ the workforce directly to maintain full employment, it contracted with civilian employers for goods and services; private employers hired most of the workers at any given time. This practice was based on historical precedents. The Governments of the United States and the various divisions thereof historically contracted out much of their necessary activities, and typically contracted all their infrastructure and other capital programs. The government contracting practice was notoriously riddled with corruption and beset with scandal. The regulations and standards put in place prior to, during, and after WWII cut back on much of the corruption, while policies adopted in Washington and state capitols vastly expanded the Government's ability to contract for goods and services and to expand its own workforces to accomplish non-military ends and objectives.

The system worked relatively well until the mid-to-later 1970's when it started breaking down, and by the 1980's it was being overhauled and/or eliminated on a massive scale and that process has led directly to where we are now.

We can look back and comprehend what happened: the rebellions of the 1960's, the defeat in Vietnam, the oil-price shocks of the 1970's as consequence of Israeli military advances, and the advent of Ronald Reagan's "Morning in America" in 1980 which posited that government was the problem not the solution.

While these events provided the basis for dismantling previously very successful full employment policies, those policies themselves had been deeply resented by the capitalist and rentier class from the outset.

Any policies which benefited the working classes were resented and fought bitterly.

Of course over time any policy can be rendered obsolete. What happened to the full-employment policy, however, was something else again.

The problem was that the People rebelled -- or enough of them did -- to undermine the policy and eventually to literally reverse it. Now the policy is to maintain historically high unemployment rates indefinitely. This not only has the salutatory effect of forcing down working class wages and benefits, it causes many people to leave the workforce altogether. What they do to survive is something of a mystery, but a fraction turn to various forms of criminal activity, which when prosecuted and convictions secured can turn into a profit center for the civilian sector through privatized prisons.

The public elementary, secondary and higher educational system that was once the envy of the world has become a rickety, over administered, under-funded mess that is being successfully challenged by a largely publicly funded charter school and private "college" system that has the additional salutary effect of placing students in perpetual debt should they seek a degree.

In fact, debt-peonage has become a feature of the modern financial system, something that was once abhorrent to Americans. But since it is nearly impossible for one income earner to provide for a family any more, and even two incomes in a household are inadequate for a modest lifestyle in many cities, ever increasing household debt has become commonplace.

Full employment at decent wages would help ensure that debt would be a trifle rather than a major burden for Americans, and a fully funded, lightly administered public education system would help ensure that its graduates are not burdened by perpetual debt as well.

There's an absurd myth that "government doesn't create jobs" only private industry does. It's not even a pious fraud, it's an outright lie. Government is a primary job creator, even under the reactionary regimes we are faced with today.

The only question is, cui bono? And if that's you and me directly and not the High and the Mighty, then our government is set up to ensure that we don't have it.

My early suggestions when the first signs of the Endless Recession emerged were to 1) provide substantial household debt relief, to the tune of $80,000 to $100,000 per household; this would have had the same effect on the banks' bottom lines as the trillions that were given to them directly, but it would also have boosted the financial position of the average household, and for some reason still not clear, "we can't have that." 2) engage in a real jobs program, providing employment to everyone who could work and needed a job, at fair wages and benefits, doing necessary work on behalf of the People; 3) end the grossly overfunded and unnecessary imperial wars of aggression.

I'm convinced this program would have had a net positive effect, essentially ending the Recession within a few months, whereas the policies that have been adopted have perpetuated the Recession for the vast majority of Americans while providing ever larger financial rewards for those at the very top. At the same time, the risks to the economy as whole grow exponentially because it is more and more dependent on perpetual war and the accumulated wealth of the Highest of the Mighty.

We the People don't seem to have any influence on the policies of Government, no matter how skilled we may be in Changing The Conversation. Austerity is still the policy, and austerity is producing the results we see everywhere. The policy is wrong and deadly, but pointing it out will not change it.

The only thing we can do that may eventually change the economic situation for the vast majority of Americans for the better is to withdraw.

And that will be the next episode in this series...

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